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How Fuel Retailers Can Grab Market Share Through Personalization

For the first time in decades, the fuel retail demand has collapsed dramatically.

The fuel retail landscape has been largely frozen for decades. But the industry is facing an unprecedented demand drop this year. Oil demand in 2020 is expected to fall by 8.1 million barrels per day, the largest in history, according to the June forecast by the International Energy Agency (IEA).

How Fuel Retailers Can Grab Market Share Through Personalization

For the first time in decades, the fuel retail industry is facing significant change. Watch our discussion on how to acquire customers and catch a potential upcoming recovery wave early.

The easing of lockdown measures in some countries should provide a boost, as mobility data indicates that demand for fuel will rebound. For example, China’s lockdown easing drove demand in April almost back to last year’s levels. Even so, global demand for oil in 2020 is expected to be lower by 8.1 million barrels per day compared to 2019, according to IEA data. Furthermore, reduced jet and kerosene deliveries will affect total oil demand until at least 2022. The gap in demand is in large part due to the aviation industry. Passenger traffic in 2020 is expected to be nearly 55% lower than in 2019, according to data from the International Air Transport Association. The price war between Saudi Arabia and Russia also caused a price collapse simultaneously. Interestingly, this helped protect the profits for the fuel retailers as demand collapsed, but the profit increase won’t last long, as retail prices typically catch up to crude oil prices.

The fuel retail industry is clearly facing significant change. Fuel retailers and their consumers are experiencing this change from very different points of view. In this environment, fuel retail companies have a lot on their plate. They are thinking about how to preserve their dividends, how to preserve cash and how to reduce costs and inventory. Meanwhile, their customers have undergone a major behavior shift. Personal health and safety concerns are paramount, with considerations such as whether they are safe going to the fuel station, or if contactless service and payment are available. The challenge for industry leaders will be how to bridge this gap—addressing the consumers’ worries while meeting company goals.

The disruption is a significant opportunity for the fuel retail industry. If fuel retailers address consumer requirements and personalize products and services, they can build and increase a loyal consumer base. Now is the opportunity to acquire customers and catch a potential upcoming recovery wave early. Publicis Sapient’s approach to consumer engagement can help potentially capture an additional 20 percent to 30 percent of total mogas (motor gasoline) fuel sales while reducing marketing operating expenses.

If fuel retailers address consumer requirements and personalize products and services, they can build and increase a loyal consumer base.

Personalize Through Data

Personalization has become key to bridging the gap between company and consumer needs. By understanding the behavior profiles of consumers, a company can identify trends and create personalized messaging to go hand-in-hand with product and service offers.

Consumer requirements are continually evolving, region by region, city by city. Keeping tabs on this development is important. People want to know if the convenience store attached to the fuel station can deliver groceries, and what products are stocked in order to make fewer stops. They want to stock their pantry in addition to keeping their gas tank full.

By understanding the behavior profiles of consumers, a company can identify trends and create personalized messaging to go hand-in-hand with product and service offers.

For example, fuel retailers must rethink their offers to satisfy customer safety requirements. Contactless payment as a service must be clearly advertised, for example, through a text message or email. Traditionally, fuel retail promotions have been around discounts on fuel, without providing a new service. With contactless, fuel stations must ensure that they have the technology they advertise. The approach we recommend is to continually look at consumer behavior signals and identify what new or updated services the retailer should offer (for example, hand sanitizers, contactless payment, C-store ecommerce, etc.) and have a coordinated communication campaign.

Three Components of How to Do It

Fuel retailers can personalize their offerings using the Publicis Sapient and Epsilon approach of combining Data, Technology and Experience.

Data – Fuel retailers can access around 200 million profiles in the US alone. Similar volumes of data are available in Western Europe, as a lot of available data is compliant with privacy laws including General Data Protection Regulation (GDPR)—a regulation in EU law on data protection. Accessing and unlocking data profiles are the lynchpin to understanding behavior profiles of a large consumer base. We look at the aggregate data and trends to gain a deep knowledge of consumer signals and key moments by audience and geography. Traditional companies have used cookies, which last a day or two. However, platforms such as the Epsilon PeopleCloud are more persistent by connecting the behavior to devices and people. This data provides a 55-60% accuracy when matching data points. Compared to the industry average of media companies, which is usually between 3-4%. Therefore, using the latest technology to utilize data is a significant competitive advantage.

Technology – Technology allows a fuel retailer to correlate behaviors from different data sources into a single profile. For example, if a consumer has visited certain places, spent money on certain websites and watched various TV shows, this data from different sources can be correlated into key behavior points. The Epsilon PeopleCloud is a data and activation platform used to activate, personalize and drive performance with the power of deep customer understanding. The machine learning algorithms are continually refining the matches as new data points and signals come in. This platform also measures the effectiveness of the various programs so that a marketing team can make a proactive decision rather than a look-back. In addition to the communication and measurement, companies also need to ensure that the overall digital experience and offline experience (as described in the next paragraph) are integrated with the data. Because history is no longer a guide to the future, how retailers forecast demand and adjust supply accordingly will need to change. This is another area to look for the consumer behavior signals to help chart a path forward.

Experience – Companies must go to where the consumer is. Consumers are not as likely to download another new app and start using it. Fuel retailers should use the apps that their customers are already using. For example, on-demand delivery start-up, Rappi, in Latin America has enjoyed success. So, fuel retailers can think about creating an offer or promotion inside the likes of Rappi or Amazon. They could even place an ad inside Candycrush; it doesn’t have to be traditional media. Companies must bring personalized media and digital experience into the consumer’s ecosystem. Beyond communication, the end-to-end (online to offline) experience must also be part of the experience design philosophy. For example, eCommerce, full service fuel stations, contactless payment, stocking high demand items, etc. should be part of the experience design in an integrated way if the consumer signals are showing that.

Companies must bring personalised media and digital experience into the consumer’s ecosystem.

This approach should not be a one-time event. Once the technologies are in place initially, the retailers need to think about how to evolve. This is because the consumer sentiment and behavior are also changing week to week and location to location. The idea is to build a data-technology-experience “flywheel” that will allow the retailers to continually adapt to evolving sentiments and behaviors of the consumers.

Measure Success

Fuel retailers must go full cycle. On one hand, they must test and learn, and on the other hand, respond to rapidly changing consumer sentiment. Consumer worries in April will have changed from their concerns in May, June and now in August. Companies must stay on top of these shifting needs and understand the requirements. This includes responding to where sentiment and behavior are moving to and responding to what’s working and what’s not working in terms of new offers and services. It’s a rapid response cycle. Fuel retailers must evolve into nimble organizations to be ahead of the curve of where the consumer is going.

Fuel retailers must evolve into nimble organizations to be ahead of the curve of where the consumer is going.